3 AI-Focused ETFs for Passive Investment Strategies

AI is projected to experience significant growth over the next seven years, making it an attractive opportunity for passive investors. Several top ETFs provide exposure to AI without the risk associated with some other investments. These ETFs include The Roundhill Generative AI & Technology ETF (NYSEARCA: CHAT), The Wisdom Tree Artificial Intelligence & Innovation ETF (BATS: WTAI), and The Global X Artificial Intelligence & Technology ETF (NASDAQ: AIQ). These ETFs offer broad exposure to the AI market, focusing on both established blue-chip leaders and emerging small-cap companies driving the industry’s growth.

Opportunity in the AI Market

AI is estimated to be worth $100 billion by 2023 and is expected to grow at a compound annual growth rate (CAGR) of nearly 50% over the next decade. The outlook for AI suggests that it will grow 20 times over by 2030, fueled by advancements in technology, infrastructure, and services. Services are expected to be the largest and fastest-growing segment in the AI industry. As a result, blue-chip tech companies are likely to experience significant long-term gains.

Notable companies in the AI industry include NVIDIA (NASDAQ: NVDA), Oracle (NASDAQ: ORCL), and Adobe (NASDAQ: ADBE), which have all played critical roles in advancing AI technology. Oracle provides fundamental IT infrastructure and data handling capabilities, while Adobe offers a widely-used interface and data-generating creative tools. NVIDIA, known for its AI chip technology, is expected to remain the leading pure-play AI stock in the foreseeable future by providing tools and infrastructure for AI developers and applications across various levels.

Roundhill Generative AI & Technology ETF: Solid Blue Chip Exposure

The Roundhill Generative AI & Technology ETF primarily focuses on blue-chip companies and has limited exposure to small-cap and start-up firms. However, it is the smallest fund on the list, with less than $100 million in assets. While the fund does not pay a dividend like some others, its holdings help mitigate this drawback. NVIDIA is the top holding, followed by Microsoft (NASDAQ: MSFT) and Alphabet (NASDAQ: GOOG). Other notable holdings include Baidu (NASDAQ: BIDU), Adobe, Marvell Technology (NASDAQ: MRVL), Meta (NASDAQ: META), and Advanced Micro Devices (NASDAQ: AMD).

One downside of the fund is its young age, having only been traded for a few months. If the passive investment market does not gain interest in this ETF, it could struggle to gain traction and potentially disappear.

Wisdom Tree Artificial Intelligence & Innovation Fund: Deeper Exposure to AI

Wisdom Tree’s Artificial Intelligence & Innovation Fund is a larger and more established ETF, with approximately $145 million under management. This fund has been in operation for about two years and includes major players like NVIDIA and Meta Platforms in its top holdings. Among its other top holdings are Alchip, a semiconductor company specializing in ASIC and SoC designs; IonQ (NYSE: IONQ), a quantum computing company; and Synopsys (NASDAQ: SNPS), a design automation firm in the semiconductor industry. Unlike the Roundhill Generative AI & Technology ETF, shares of Wisdom Tree’s AI & Innovation Fund pay a small dividend, which helps offset fees.

Global X Artificial Intelligence & Technology ETF: Still in the Early Stages

The Global X Artificial Intelligence & Technology ETF’s top ten holdings include well-known companies such as Alphabet, Amazon, Meta, Adobe, Intel, Oracle, and NVIDIA. These companies represent a range of AI technologies, infrastructures, and services. The ETF has a bias towards services and focuses on the long-term integration of AI into everyday life.

Before considering the Wisdom Tree Artificial Intelligence and Innovation Fund, investors may want to explore other options. MarketBeat offers insight into Wall Street’s top-rated research analysts and the stocks they recommend. While Wisdom Tree Artificial Intelligence and Innovation Fund currently has a “hold” rating among analysts, there are other stocks that top-rated analysts consider better buys. For more information on these stocks, click here.

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